To mitigate the adverse effects on defense contractors and defense workers of reductions in defense spending.

IN THE HOUSE OF REPRESENTATIVES

April 28, 1993

Mr. BACCHUS of Florida introduced the following bill; which was referred jointly to the Committees on Armed Services, Small Business, Education and Labor, Energy and Commerce, Science, Space, and Technology, and Banking, Finance and Urban Affairs

A BILL

To mitigate the adverse effects on defense contractors and defense workers of reductions in defense spending.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Defense Workers Economic Reinvestment Act of 1993’.

TITLE III--COMMERCIALIZATION AND DUAL-USE RESEARCH OPPORTUNITIES FOR DEFENSE CONTRACTORS AND SMALL BUSINESS

Sec. 302. Defense and energy dual-use research under the Small Business Innovation Research Program.

Sec. 303. Commercialization loans.

Sec. 304. Promotion of industrial parks.

Sec. 305. Defense commercialization award.

TITLE IV--FAST RESPONSE STATE TECHNOLOGICAL COMPETITIVENESS GRANTS

Sec. 401. Purpose.

Sec. 402. Uses of funds.

Sec. 403. Funding formula.

Sec. 404. State eligibility.

Sec. 405. Authorization of appropriations.

SEC. 3. DEFINITIONS.

For purposes of this Act:

(1) The term ‘critical technology’ has the meaning given that term in section 2491(6) of title 10, United States Code.

(2) The term ‘dual-use’ has the meaning given that term in section 2491(2) of title 10, United States Code.

(3) The term ‘eligible defense worker’ means an employee of a qualified defense contractor or a civilian employee of the Department of Defense who is eligible for assistance under title II.

(4) The terms ‘Military-Civilian Integration and Technology Transfer Advisory Board’ and ‘Advisory Board’ mean the Military-Civilian Integration and Technology Transfer Advisory Board established under section 2516(a) of title 10, United States Code.

(5) The terms ‘Office of Training Oversight and Administration’ and ‘Office’ mean the Office of Training Oversight and Administration established under section 201.

(6) The term ‘qualified defense contractor’ means a private business producing goods or services for the Department of Defense that, during the three years immediately preceding the date of the enactment of this Act--

(A) obtained at least 30 percent of its gross income from defense contracts or subcontracts; or

(B) had at least 30 percent of its workforce actively engaged in work directly related to defense contracts or subcontracts.

TITLE I--DEFENSE PROCUREMENT SPECIFICATIONS

(a) EXAMINATION- Not later than one year after the date of the enactment of this Act, the Secretary of Defense shall complete an examination of all existing procurement contracts of the Department of Defense to determine whether those contracts which apply to dual-use technologies contain overly restrictive specifications on systems, supplies, and services that are also available commercially.

(b) REPORT- Upon completing the examination required by subsection (a), the Secretary of Defense shall submit a report to the Congress detailing the results of the examination. In the case of each contract examined under subsection (a) which exceeds $100,000 and contains Department of Defense specifications precluding the purchase of commercial sector products, the report shall include the justification for developing a different specification and the reasons for the unsuitability of commercial specifications.

(c) CONSULTATION- The Secretary of Defense shall consult with the Military-Civilian Integration and Technology Transfer Advisory Board in conducting the examination required by subsection (a) and the report required by subsection (b).

SEC. 102. GREATER DEFENSE USE OF COMMERCIALLY AVAILABLE SYSTEMS, SUPPLIES, AND SERVICES.

Section 2305(a)(1)(B) of title 10, United States Code, is amended--

(1) by striking out ‘and’ at the end of clause (i);

(2) by striking out the period at the end of clause (ii); and

(3) by adding at the end the following new clause:

‘(iii) encourage the use of commercially available systems, supplies, and services.’.

TITLE II--RETRAINING DEFENSE WORKERS FOR NEW EMPLOYMENT

SEC. 201. TRAINING OVERSIGHT AND ADMINISTRATION OFFICE.

(a) ESTABLISHMENT OF OFFICE- The Secretary of Defense shall establish an Office of Training Oversight and Administration to coordinate and oversee retraining, placement, and other transition assistance activities for eligible defense workers. The Office shall be under the supervision of the Assistant Secretary of Defense for Force Management and Personnel and shall be consolidated with existing transition assistance programs for eligible defense workers that are currently the responsibility of the Assistant Secretary.

(b) INFORMATION ON RETRAINING OPPORTUNITIES- The Office shall disseminate information to qualified defense contractors and to civilian employees of the Department of Defense concerning the availability, scope, and rules governing the retraining and other transition assistance programs for eligible defense workers established under--

(c) PLACEMENT ASSISTANCE- The Office should ensure that each qualified defense contractor informs all employees of the contractor regarding the programs referred to in subsection (b). The Office shall facilitate placement of eligible defense workers by acting as a repository for employment opportunity information and publicizing the availability of qualified employees.

(d) INFORMATION COLLECTION- The Office shall maintain statistics to analyze the effectiveness of the retraining and placement programs in order to assist the Assistant Secretary and provide any other information that the Assistant Secretary may request.

SEC. 202. RETRAINING AND OTHER TRANSITION ASSISTANCE PROGRAMS.

(a) SKILLS DEVELOPMENT PROGRAMS- The Office, in cooperation with other Federal agencies, may enter into agreements to carry out skills development programs for the provision of retraining assistance to eligible defense workers in skills identified by the Office as being, or projected to be, in short supply in the area in which the program operates. A skills development program may be developed and taught pursuant to the agreement by any Federal agency, State and local governments, institutions of higher learning (especially associate-degree granting colleges), educational consultants, or qualified defense contractors. The Office shall have principal responsibility for transition assistance to eligible defense workers selected to participate in such a skills development program and should consult with the Secretary of Labor to avoid duplication with services provided by the Department of Labor under section 325 or 325A of the Job Training Partnership Act (29 U.S.C. 1662d, 1662d-1).

(b) SCHOLARSHIP PROGRAMS- The Office may award one-year and two-year scholarships to eligible defense workers to assist the recipients of the scholarships to attend educational institutions. The scholarships shall be awarded on the basis of a competitive selection process, except that the Office may give a priority--

(1) for scholarships in certain critical occupations, as determined by the Office; and

(c) FEDERAL SHARE- The Federal contribution to a skills development program conducted under subsection (a) may not exceed 50 percent of the costs of the program.

(d) ALLOWED EXPENSES- Funds provided under this section for a skills development program may be used to pay employee certification, apprenticeship, or professional registration costs incurred by an eligible defense worker receiving retraining to enter a new profession. The Secretary may also share any other subsistence costs associated with employee transition so long as the Federal funding share does not exceed 50 percent of such costs. Extended income support requirements can be reduced by the employer through early retraining prior to employee termination.

(e) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to the Secretary of Defense for each of the fiscal years 1994 through 1996--

(1) $50,000,000 for skills development programs under subsection (a); and

(2) $25,000,000 for scholarships under subsection (b).

SEC. 203. ELIGIBLE DEFENSE WORKERS.

(a) ELIGIBILITY REQUIREMENTS- To be eligible for selection to participate in a skills development program under section 202(a) or receive a scholarship under section 202(b), an individual must be--

(1) a full-time employee of a qualified defense contractor for at least three years who--

(A) is directly involved with a Department of Defense funded project which is canceled or experiences a reduction in Federal funds equal to at least 25 percent of the Federal funds received for the project the previous year; and

(B) as a result of the cancellation or reduction, is terminated or identified by the employer as likely to be terminated within one year; or

(2) a civilian employee of the Department of Defense who is eligible for transition assistance under rules established by the Secretary of Defense.

(b) NOTIFICATION- A qualified defense contractor shall make a good faith effort to identify as early as possible employees who meet the eligibility requirements of subsection (a)(1), advise such employees on retraining options, and allow such employees to participate in skills development programs and other transition assistance programs.

(c) CERTAIN PREVIOUSLY TERMINATED EMPLOYEES- An employee of a qualified defense contractor who was terminated during the one-year period ending on the date of the enactment of this Act shall be eligible for assistance under section 202 if the Office determines that the employee--

(1) was a full-time employee of a qualified defense contractor for at least three years;

(2) was directly involved with a Department of Defense funded project; and

(3) was terminated as a result of the cancellation or a funding reduction of that project.

TITLE III--COMMERCIALIZATION AND DUAL-USE RESEARCH OPPORTUNITIES FOR DEFENSE CONTRACTORS AND SMALL BUSINESS

(a) PROMOTION PROGRAMS- The Secretary of Commerce shall establish a program to assist qualified defense contractors to participate in the Advanced Technology Program of the National Institute of Standards and Technology established under section 28 of the National Institute of Standards and Technology Act (15 U.S.C. 278n) and other appropriate programs of the Department of Commerce to commercialize significant new scientific discoveries and technologies. The Secretary shall include language in the solicitations and announcements of such programs to encourage proposals concerning critical technology and technology transfers from military to civilian applications.

SEC. 302. DEFENSE AND ENERGY DUAL-USE RESEARCH UNDER THE SMALL BUSINESS INNOVATION RESEARCH PROGRAM.

(a) ENCOURAGEMENT OF PROPOSALS WITH DUAL-USE APPLICATION- The Secretary of Defense and the Secretary of Energy, in consultation with the Administrator of the Small Business Administration, shall include language in solicitations of the Small Business Innovation Research Program conducted by the Department of Defense and the Department of Energy encouraging research proposals involving dual-use applications and proposals involving military to civilian conversion. This subsection shall apply with respect to solicitations for projects to be funded in fiscal year 1994 and subsequent fiscal years.

(b) SPECIAL SET ASIDE- Of the amount of the research and development budget of the Department of Defense and the Department of Energy required under section 9(f)(1) of the Small Business Act (15 U.S.C. 638(f)(1)) to be expended with small business concerns in connection with the Small Business Innovation Research Program--

(1) 10 percent of the amount set aside for fiscal year 1994;

(2) 15 percent of the amount set aside for each of the fiscal years 1995 and 1996; and

(3) 20 percent of the amount set aside for fiscal year 1997,

shall be reserved for projects involving dual-use applications and projects involving military to civilian conversion.

SEC. 303. COMMERCIALIZATION LOANS.

(a) LOANS AUTHORIZED- The Secretary of Commerce may make loans to qualified defense contractors to carry out commercialization projects. The potential for the development of a product that has military applications and nonmilitary commercial applications shall be a criterion in the selection of projects for funding, although not an absolute requirement. Other criteria should include the risk of the project compared to the utility to consumers and the United States.

(b) AMOUNT AND NUMBER OF LOANS- A loan under this section may not exceed $2,000,000 for any one commercialization project. No more than three loans may be made to any single company or joint venture.

(c) TERMS- A loan under this section shall be made under such terms and conditions as the Secretary of Commerce may require, including the payment of fair market interest, except that repayment of the loan shall be completed within seven years after the loan is made.

(d) MATCHING REQUIREMENT- The recipient of a loan under this section shall be required to match the amount of the loan with an equal amount of non-Federal funds specifically guaranteed for use in the project.

(e) AUTHORIZATION OF APPROPRIATIONS- There is authorized to be appropriated to the Secretary of Commerce for fiscal year 1994 $150,000,000 to carry out this section. Funds appropriated pursuant to this subsection shall be available until expended.

SEC. 304. PROMOTION OF INDUSTRIAL PARKS.

(a) PROMOTION- The Secretary of Defense shall encourage the creation of industrial parks or technology incubator centers, including prototyping facilities, to transfer and spinoff technology from qualified defense contractors, including those operating national laboratories, to small businesses.

(b) USES OF PATENT ROYALTIES- The Secretary of Defense may use up to 50 percent of the royalties from the licensing of relevant Department of Defense and Department of Energy owned patents to assist local technology transfer activities conducted in close proximity to qualified defense contractor facilities and up to 25 percent of such royalties to assist technology transfer activities that are unrelated to the proximity of a qualified defense contractor facility.

SEC. 305. DEFENSE COMMERCIALIZATION AWARD.

(a) AWARD- The Secretary of Defense, in consultation with the Secretary of Commerce, shall create and administer an awards program to foster and encourage innovation and redirection efforts by qualified defense contractors in the area of commercialization. Criteria for selection of award recipients shall include job creation, leverage of Federal funding, and product quality.

(b) MODEL- The Secretary shall model the awards program after the Malcolm Baldrige Quality Awards provided under section 17 of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3711a).

TITLE IV--FAST RESPONSE STATE TECHNOLOGICAL COMPETITIVENESS GRANTS

SEC. 401. PURPOSE.

The purpose of this title is to provide Federal assistance directly to States for defense reinvestment programs to improve existing programs and to create new initiatives.

SEC. 402. USES OF FUNDS.

(a) IN GENERAL- Funds made available under this title shall be used by States to assist industries, workers, and communities that have been adversely affected by the overall reduction of defense spending in the State. States may use such funds in conjunction with other Federal or State assistance for programs within the public and private sectors, involving industry, communities, and educational institutions. Qualifying projects should stress economic development, quality job growth, education and retraining, technology transfer, technology infrastructure, and enhanced competitiveness. Preference in the funding of projects should be given to projects concerning the development or improvement of transportation infrastructure or environmentally sustaining technologies.

SEC. 403. FUNDING FORMULA.

(a) ALLOCATION- From the amount appropriated under section 405 for a fiscal year, the Secretary of Defense shall allocate such amounts for distribution consistent with the formula specified in subsection (b) for such fiscal years. The Secretary shall make such allocation in consultation with the Military-Civilian Integration and Technology Transfer Advisory Board.

(b) FORMULA- From the amount allocated for a fiscal year under subsection (a), the Secretary of Defense shall distribute during such fiscal year fast response State technological competitiveness grants to States whose reinvestment programs meet the requirements of section 404 as follows:

(1) 50 percent of the total allocation for that year shall be distributed among the States pro rata based on the ratio of the population of the State to the total population of all States, as determined by the latest available Federal census.

(2) 50 percent of the total allocation for that year to be distributed among the States pro rata based on the ratio of the cumulative dollar amount of Department of Defense purchases in the State for fiscal year 1992 (including research and development, procurement, operations and maintenance, and construction) to the total dollar amount of such Department of Defense purchases in all the States as determined by the Department of Defense using its most recent official data collected after fiscal year 1990.

SEC. 404. STATE ELIGIBILITY.

(a) APPLICATION GUIDELINES- The Secretary of Defense, in consultation with the Advisory Board shall develop and disseminate guidelines on State eligibility for fast response State technological competitiveness grants. The guidelines shall require the following:

(1) The State shall agree to contribute to the defense reinvestment program of the State an amount equal to at least 10 percent of the amount of the technological competitiveness grant made to the State.

(2) Any program using funds provided under a technological competitiveness grant that is assisting a defense contractor shall require the contractor to provide at least a $1 funding match for every $2 expended in grant funds to assist the contractor.

(3) In addition to the matching contribution required by paragraph (1), the State shall guarantee to maintain its aggregate expenditures from all other sources for programs which provide technical and financial assistance to defense contractors at or above the average level of such expenditures in the two fiscal years preceding the date of the enactment of this Act.

(b) STATE RESPONSIBILITY- Prior to receiving a fast response State technological competitiveness grant, the Governor of the State shall provide to the Secretary of Defense information about the defense reinvestment program conducted by the State. The State shall appoint a single agency or entity within the State to be the recipient of the Federal funding and to administer and oversee the State’s reinvestment program. Each State must annually report on the progress of its defense reinvestment programs back to the Secretary and supply any analysis data that the Secretary may require for program evaluation.

(c) WITHHOLDING OF GRANT FUNDS- The Secretary of Defense shall withhold a fast response State technological competitiveness grant from any State if the Secretary concludes that the State’s defense reinvestment program or the progress of such program is unsatisfactory relative to the published guidelines. In such a case, the Secretary shall provide to the State the reasons for its disqualification and provide a 90-day appeal period during which the State shall be allowed to submit a revised proposal for review by the Secretary.

SEC. 405. AUTHORIZATION OF APPROPRIATIONS.

(a) IN GENERAL- There is authorized to be appropriated to the Secretary of Defense for the fiscal years 1994 through 1996 $1,000,000,000 for fast response State technological competitiveness grants under this title.